An Example of Wage Theft by Misclassifying Employees
For workers, the cost of being misclassified can be detrimental. For example, consider an employee, Jessica, who was misclassified as an independent contractor because she was paid an annual amount of $38,000 (which is less than “two times the state minimum wage for full-time employment” meaning that Jessica could not properly be classified as an employee exempt from overtime pay). Jessica worked on average 45 hours a week. So, her employer is depriving her of 5 hours of overtime each week by misclassifying her as an independent contract. Not only that, but Jessica’s employer is also depriving her of other benefits and protections that she is entitled to under the Labor Code.
Jessica can seek all unpaid minimum and overtime wages, among other damages. Here’s how those damages would be calculated:
A salary of $38,520 is equivalent to an hourly rate of $19.00. To calculate Jessica’s unpaid minimum wages and overtime wages, we use a regular rate of $19.00 per hour and an overtime rate of $28.50 per hour. Because Jessica was not paid for those additional 5 hours each week, her damages would be equivalent to $7,410 each year ($28.50 x 5 hours each week x 52 weeks), not including the pre-judgment interest, liquidated damages, attorneys’ fees and litigation costs that Jessica could also recover in a lawsuit.
Under California law, employees can seek up to four years of unpaid minimum wages and overtime. Those unpaid wages can be considerable. In this example, for a four-year period, Sarah could recover in excess of $29,640, just for her unpaid minimum and overtime wages. The penalties owed to Jessica for failure to pay wages when due, inaccurate paystubs, and missed breaks would likely number in the tens of thousands of dollars as well.